Joe Koufman, Setup

[00:00:55] Sanjay Parekh: Today's guest is Joe Koufman, the founder and CEO of Setup, an organization that pairs marketing agencies with established brands. He has over 20 years of experience in the field and started Setup in 2014. Joe, welcome to the show. 

[00:01:11] Joe Koufman: Thanks so much for having me, Sanjay. I'm excited to be here. 

[00:01:15] Sanjay Parekh: And I'm excited to have you on because I think this is going to be a really fun conversation, having a serial entrepreneur on the show as well. But before we get into all of that, give us a little bit about your background and what got you to where you are today. 

[00:01:28] Joe Koufman: Well, I mean in college I was a politics and speech communications major. So I was clearly cut out for marketing, right? Perfect background for that. But I spent my first four years in retail, and I actually moved from North Carolina where I went to college to New Orleans, Louisiana for four years. And then Eddie Bauer moved me from New Orleans to Jackson Hole, Wyoming for a year and a half. And then they moved me to Atlanta. I did one holiday season running the biggest store in the Southeast for Eddie Bauer and I had to get the hell out of retail. 

[00:02:02] Sanjay Parekh: So, I’ve got to tell you, I’ve got to stop you right there. I'm a huge Eddie Bauer fan. That's the jeans I wear. I love their stuff. It's great. 

[00:02:10] Joe Koufman: Well, and I spent the first two years at Abercrombie and Fitch and then Eddie Bauer. That documentary on Netflix, I lived through that documentary. So, I then went to work for a dot com in early 2000 and ended up spending eight years at that dot com. It was called Knowledge Storm. And we got acquired by our biggest competitor, went public, raised $130 million in 2007 and bought Knowledge Storm for $58 million. And I then went to work for a small digital agency called Spun Logic that then soon became called Engaged. They got acquired by Engaged, by private equity and ran business development and marketing for six years.

And then we got acquired by the Publicis Groupe, the massive agency holding company, and they merged us with an agency called Moxie. We were 250 people and about $43 million in revenue when we sold to Publicis Groupe. And I was responsible for bringing in new clients. So, I brought in, I don't know, a big chunk of that revenue and those clients that made up that revenue.

But when we sold in 2013, I spent three or four months with the holding company agency and just decided that it was time for me to do my own thing. So that launched me into the idea of becoming an entrepreneur. 

[00:03:37] Sanjay Parekh: So, okay, wait a minute. See, I've known you long enough that I thought you had done entrepreneurial things before. So, is this the first time? 

[00:03:44] Joe Koufman: Yes. So, Setup is just celebrated our 10th anniversary. And, that was my first time. But I will say, being in business development and in sales for a big chunk of my career, that's a very entrepreneurial path. It's one of those careers where I always felt like I could work harder and work more and make more money, or I could work less hard and make less money.

And I'll never forget walking into the CFO, his office at Knowledge Storm and I said, "I'll tell you what, don't pay me any salary. Don't pay me any benefits. Just pay me 20 percent of what I sell. That's it." And you saw him, the hamsters running in his head quickly as he did the math. And he's said "No." Because he knew that I was probably going to sell maybe $2 million worth that year because I was good at my job.

And he's doing the math. He's like "I'm not paying this kid $400,000, with no benefits and no salary. So, I felt like an entrepreneur for a good chunk of my career, but the first time I started a company was early 2014. 

[00:05:03] Sanjay Parekh: Yeah. Talking about the name of one of the companies that you worked at because of the acquisitions, that's some moxie there to go in and I'd be like, "Hey, let's do this deal."

[00:05:12] Joe Koufman: Yeah. So I've been a part of three acquisitions. The first was when Knowledge Storm was acquired by Tech Target, which was the company that went public. Second was when Spun Logic was acquired by Engage and how your capital was the private equity. And then the third was when we sold Engage to Publicis Groupe and then got merged with Moxie and we were 250 people.

They were 350 people. So this 600 person agency was the one I spent maybe four or five months there and then left to do my thing.

[00:05:42] Sanjay Parekh: Right. So, before what you're doing now, had you ever done anything entrepreneurial? Maybe as a kid? Was there anything like that? 

[00:05:49] Joe Koufman: Lemonade stands? Sure. Nothing specifically entrepreneurial, but I do find it fascinating now that I think about it that both my parents, well, I should say my mom and my brother, neither of them have ever had a, quote, formal job.

My mother's a clinical counselor that always had her own counseling practice. My brother's a drummer in Nashville and plays, teaches lessons and plays sessions. So, they're both technically entrepreneurs in that they have never had an employer, and they've always worked for themselves.

So, I do think there was some entrepreneurial blood in the family, so to speak. 

[00:06:32] Sanjay Parekh: Yeah. So, through this kind of process of starting up Setup, have you leaned on them? Have you asked them questions, gotten advice or anything else like that? 

[00:06:42] Joe Koufman: No. No, not really. Their businesses are so different than mine.

I think it was more, it's more of the mindset and philosophy that I maybe inherited from their experience. Such as, I get phone calls in the middle of the day from either of them, because they're not used to having a formal schedule where you might have a boss that walks in and needs to talk to you right at the time you get the phone call or whatever.

They both had very flexible schedules for a long, long time. And so I think that was one thing that did appeal to me as an entrepreneur. What I didn't realize was, while you do have that flexibility, owning the responsibility means that it's hard to turn off. And I know we'll talk a little bit more about, how do we maintain some balance between work life and personal life?

[00:07:36] Sanjay Parekh: Yeah, absolutely. So, okay, let's dig into how you came up with this idea and decided to start this, of all things. You've been doing them, the marketing agency thing and, give us a little bit about what spawned this idea. Why? 

[00:07:51] Joe Koufman: So a couple things. First, there are three couples who have married as a result of me introducing them to each other. So, matchmaking was always something that I was very passionate about. I always thought there was something magical about learning something about two different people and putting them together and matching them. And that translated really well into a sales career because your job in sales is to build a new relationship with somebody, learn about them, understand them, and then help them solve a problem.

And sometimes that problem is solved by connecting them to another person. And so when we sold Engage to Publicis Groupe and merged with Moxie, I had friends that really wanted me to start a marketing agency. And I thought about that. But do I really want to build websites or create video for TV or social or PR or whatever the things are?

And to me, I was always more excited about the matchmaking aspect and making the connections than I was about once they connected, then that got boring to me. Building a website would have been not the exciting part to me, but the exciting part was matching the agency and the brand together; was the idea that helped me form what is now Setup.

Originally, I actually early on, I got a message on Facebook messenger, which was this thing that people used to use back in the day to interact with each other. And it was from a friend who was the head of marketing for the Cartoon Network, which was part of Turner. And she was considering hiring an agency and wanted to know my opinion about which agency she should hire, and that back and forth and that conversation prompted me to think about the idea of, could I turn my passion for matchmaking and connecting people together into a business matchmaking business that connects brands, like in this case, the Cartoon Network, with marketing agencies that could support them.

[00:10:05] Sanjay Parekh: Yeah, okay. So, that's a fascinating kind of start of it. Was there anything that made you nervous about doing this? And if so, how did you overcome that? 

[00:10:18] Joe Koufman: Well, the one good thing that helped me launch the new business was I negotiated a severance when I left; Engage/Moxie/Publicis Groupe, and it was a three-month severance. While the severance didn't pay for my new business at all, it helped me feel like at least I've got a little bit of runway where I don't have a lot of pressure that I have to make money to pay the mortgage and pay for family and all that kind of thing. But yes, I definitely was one of those guys that had to write some of those credit card checks to fund the initial startup. Because I also immediately hired a person that I had hired at the agency. I brought her over to work for me for that first year as an employee, and so I knew I was not only paying for my own, trying to replace my own salary from my agency gig, but also paying for the livelihood of some other person. And I definitely had to make payroll for that person and even for myself, and so I had to write some checks from the credit card companies and then was fortunate to be able to pay them off pretty quickly. 

[00:11:39] Sanjay Parekh: Yeah. So in launching this you know going in, you know asking for severance and moving over. What stage were you at? Did you have anybody that was already like lined up to be a client or was it starting from scratch? You're like, okay. I got to build from zero on day one.

[00:11:54] Joe Koufman: This is pretty crazy. So, my last day at the agency was January 2nd 2014, and I announced that on social media that "Hey I'm leaving Publicis Groupe and I'm trying to decide what I want to do next," right? And I almost immediately had a host of job offers in front of me. I had six job offers and they were mostly from marketing agencies that said, "We want you to do what you did for them, but do it for me."

And I was having a breakfast with a mentor. I'll say it, Genevieve Bos, who some people in Atlanta might know who Genevieve is. And she said, "Well, why are you going to go work for these agencies and get paid 5 percent of the equity in the company when they want you to bring in 95 percent of the revenue?"

And she said, "Why don't you start your own thing?" So, I thought about that. And one of the messages I got on social media was from a small agency based in North Carolina, in my hometown where I grew up, in Winston-Salem. And it was a guy that I had grown up with who said, "Well, why don't you come home to Winston-Salem and work for our agency and help us grow?"

And I said, "I'm not going to do that, but I have this idea. Can I come pitch it to you?" And so, I went home to Winston-Salem for a long weekend. And that Monday I showed up at their office and I pitched them the idea that became Setup. And they signed a contract on January 29th, 2014.

And then I formed an LLC on February 4th, which is what I consider our anniversary. And by February 4th, I think I had already had my second agency sign an agreement to work with us. And then I had a third sign an agreement soon after, and then a fourth. And once I had four agencies paying us a monthly retainer, it felt like, okay, I can do this. I can pay for my employee's salary. I can pay myself enough to at least support my family in the short term. And I can maybe pay back some of those additional credit card loans that I had taken. So that was the beginning. 

[00:14:20] Sanjay Parekh: So, 19 days from when you announced, I'm trying to figure out, to first customer, basically.

[00:14:29] Joe Koufman: Yeah. And, the model is, and was then, that there are marketing agencies that pay us a monthly retainer for ongoing business development support. So, our job is to help find opportunities that are a good fit and then make introductions and then get out of the way. 

And then they also pay us a small percentage of the deal. If they get a kiss at the end of the date that we set for them. And so, that retainer was very important to the model because that retainer helps pay for salary and software and insurance and all of the things that you need to run a small business. 

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[00:15:35] Sanjay Parekh: So, let's talk about that part of it, the running the small business. How do you, for yourself, manage the stress of having that full time business and then everything else in life? 

[00:15:48] Joe Koufman: Well, I didn't have gray hair when I started the company, so that tells you. But I will say for me, I've always found outside outlets that have really helped me manage stress.

And I've found some really amazing hobbies. This will be my 22nd Peachtree Road Race that I run this year. So, I became a runner, and I play tennis and I do other sports and outdoor hiking and outdoor activities. I have almost 14-year-old kids that are fun and they keep me busy and help me relieve stress because I like to enjoy things like going to sports, either their sporting events or going with them, to sporting events, museums, and things like that, concerts.

But also three years ago during the pandemic, I inherited my grandmother's, now 100-year-old trumpet. And I began taking trumpet lessons and I found that to be a really great creative outlet, because, while I'm playing the trumpet and practicing the trumpet, it's hard to think of anything else. And so, it's a great way to kind of get away. 

[00:17:05] Sanjay Parekh: Well, I'm sorry for your loss, but I'm happy that you've got a great way of remembering her every time. 

[00:17:12] Joe Koufman: She died when I was in college, but my uncle had the trumpet and knew I was interested and asked me if I wanted it. And so, he shipped it to me. And then I began lessons via Zoom because of the pandemic and now have been doing lessons in person, now that we're all able to do that. 

[00:17:32] Sanjay Parekh: Oh, that's awesome. That is an incredible, incredible story. Yeah, brass instruments, most instruments like that will last forever if you take care of them, so that is absolutely fantastic.

[00:17:44] Joe Koufman: So yeah, it was in beautiful shape I did have to have a little work done on it to really, make it suitable and it's a hundred year old instrument, but the case was pretty beat up, but the instrument was okay.

And so, it's been really gratifying, not just learning something new and really stimulating my brain that way but knowing that this was my grandmother's instrument is pretty cool. 

[00:18:08] Sanjay Parekh: Yeah, and that's what cases are for by the way, they're sacrificial to the thing they're protecting inside.

Okay. Let's talk about boundaries then. You know for us as entrepreneurs, this can consume every waking moment for us. How do you set those boundaries for yourself? And do you let it consume every waking moment? And if not, how do you manage that? 

[00:18:33] Joe Koufman: You know, it's interesting. There are days that I get home and I'm feeling like I need to get something done and I get it done after the day is over, but that's not frequent.

I really focus on being as efficient and effective as I can during the day so that I don't have to. And, I often will get emails and things at night and intentionally not reply to them until the next morning. Or if I do reply to them in the evening, I'll intentionally schedule the email to go out the next day so that even if I was thinking about it at night, I don't want that person to have an expectation that I'm going to always respond to them at any hour of the night.

[00:19:18] Sanjay Parekh: That's actually a really good idea and I will say I'm guilty of not doing that and sending them out. Maybe I do need to schedule. 

[00:19:28] Joe Koufman: It's super easy to do. I'll schedule for 8 am the next morning which is fine, you know for them to think that I'm thinking about them at 8 am instead of at 6:30 or 7 pm.

[00:19:39] Sanjay Parekh: Right, now that is a great idea. Plus, you don't get an automatic response that then you feel compelled to respond back to right at that time. That is a good trick right there okay, you mentioned a little bit ago that you do things like tennis and running and stuff. Do you have a regular routine? Or is it just up to these events that you plan for? 

[00:20:00] Joe Koufman: No, so, I get up pretty early in the morning, 5, 5:30, 6, depending on what's going on, right? And my first thing is to work out and it's 50 pull-ups every morning. Every morning I do 50 pull-ups, and then I either go running or I lift weights. If it's nice out, I'll go running. If it's not nice out, I'll lift weights. And I combine, but almost every day, well, every day begins with 50 pull ups, but some days, I'd say five to six days a week, it's either lifting weights or running. And I do find that's also some stress relief and certainly good for me mentally, in addition to physically.

[00:20:43] Sanjay Parekh: Yeah, you've mentioned it a couple of times and I got to ask, why the 50 pull ups? Why is that number and why pull ups? 

[00:20:50] Joe Koufman: Because I started with doing 20 or 30 and it might turn to 75 or 100, but I do a set of 25 overhand and a set of 25 underhand and I feel like that's just a good amount to start my day.

And I mix that with my routine of, I make the same breakfast every single morning and I'm one of these people that lives a pretty habitual and routine life on purpose for certain things, and then I like to stimulate myself with unroutine, with different experiences and new experiences.

[00:21:30] Sanjay Parekh: Yeah well, let's talk about the other end of your day then, and I expect there's probably a similar answer. Sleep and wellness stuff. Is there something that you do? Are you consistent there as well? 

[00:21:40] Joe Koufman: Yeah, sleep has always been a challenge for me. I don't sleep as many hours as I probably need for my body and it's a constant source, it's a struggle that I've constantly had, but basically, I try to go to bed around the same time every night and get up at the same time every day. And I've done all of the sleep hygiene things that you're supposed to do. A cool, dark room and a comfortable mattress and white noise and all of those things.

But, as I've gotten older, I often will wake up in the middle of the night for an hour or so and then I'll eventually go back to sleep. So, I do end up getting a full night's sleep, but it's often truncated in the middle.

[00:22:29] Sanjay Parekh: Right. I definitely feel you. As we get older it's one of those things man, sleep, just, it's a tough thing to make sure that you get proper full night and maybe our bodies are just different now and maybe that proper full night's different. 

[00:22:43] Joe Koufman: And I've read all the studies that say how important it is and I get it. But it's one thing to know how important it is and another thing to actually be able to do it, right? 

[00:22:52] Sanjay Parekh: Yeah. Let's change gears a little bit and talk about the business and how you run it and how you manage it. How many people are you up to now? 

[00:23:03] Joe Koufman: Seven full-time and two part-time. It's been amazing because the full-time folks, five of them are here in Atlanta. 

One of them is a full-time VA that lives in the Philippines, and one is a full-time person that we just hired at the beginning of this year who lives down in Florida, but comes up about once a quarter to be with the team.

So, just to tell you about the team, about six months ago, I promoted my chief operating officer to president and then the newest hire is our senior vice president of growth. And both of those, both the hire and the promotion have been very crucial parts of my strategy moving forward for the business.

When I promoted my COO to president, her first question was, "Well, where are you going?" And my answer to that was, "I need you to help me keep the trains on the tracks, while I build new tracks." And that's true. And so, I've already started building the new tracks and we can talk about that.

But the other key hire was that SVP of growth. She was senior vice president of business development for Razorfish, which is part of that actually, ironically, same holding company, Publisis Groupe, massive holding company, but she made probably a huge salary and also worked crazy, crazy hours, like too much, to the point where I think there was some burnout.

And that caused her to quit and reassess, her life. And I'd known her for many years and knew how talented she was. And so, we swooped in and hired her and we're thrilled to have her. And I think she's thrilled to be working with us because she spent her whole career doing agency business development. And she's happy to be working with marketing agencies and with clients, but not on one particular agency. 

[00:25:16] Sanjay Parekh: Yeah, interesting. One of the things I think I read was you're working on a book. Tell us a little bit about that and what spawned you into doing that. 

[00:25:29] Joe Koufman: So, I decided to write the book just because I think I have some skills and something to say that are more rare than I initially thought.

I thought everybody's brain thinks the way my brain thinks, which is, if you've ever seen one of these crime scene shows and you see the cork board, the bulletin board, the red threads, and it's got a perp and a victim and a brother of the victim and there's the red thread connecting the nodes, you know, of the different people. And that's the way my brain works.

I think about people. When I know people, there are specific tidbits of information that I remember about them. And some might feel that they're useless bits of trivia, but I use those tidbits to connect people with other people. And so, the book is called the Connector's Compass and the working title is, Mastering the Art of Business Matchmaking or just Mastering Business Matchmaking.

And it's not a networking book. It's about unlocking the power of human connections and leveraging matchmaking as a skill, which is learnable, by the way. It's not inherent or native, but being a good matchmaker leads to both personal and professional growth in the long term. 

[00:26:59] Sanjay Parekh: Yeah. 

[00:27:00] Joe Koufman: And so, in the book, I know I'm still in the early phases of the writing process, but in the book, we'll talk about what are the strategies and the skills that you need to build to become a good matchmaker. And why does that benefit you in the long term in personal life and your career. 

[00:27:18] Sanjay Parekh: Yeah I love that. There's I think a lot of nuances in there I and I think the challenges for a lot of people — entrepreneurs, business development folks — is viewing relationships as transactional versus relationship wise that are you know, you're building this foundation and I think you're tapping in on that second part. Actually getting to know people for who they are and then using that to make those introductions.

[00:27:50] Joe Koufman: But remembering little things like, what alma mater did they attend? And are there some interesting things about their hobbies or their likes or whatever that make them. And so, some of the matches that I've made over the years, and I mentioned that there are three people that married as a result of the introducing to each other, but that was just for fun.

I'm one of the few people who actually leveraged their passion and made a company that does exactly that. My company matches brands and marketing agencies together, or really it's people, right? Marketers with people from marketing agencies that can support them and help fill gaps. And, I think about some of the matches that I've made over the years. Many of them had no specific financial benefit. 

I'll give you an example. A friend of mine got a job as the head of marketing for Kellogg's, the chief marketing officer for Kellogg's. And when I first heard about her new job, I asked her if she'd ever met this guy named Rick. And she said, I don’t think I've met Rick.

I said, well, Rick is the head of social media marketing for Kellogg's. Let me introduce you. And literally this guy reported into her organization somewhere, but I was able to connect her to somebody that was in her organization, which, you know, in the short run, there's no specific reason that benefited me personally other than, I like having a reputation for being the person that connects people together, that brings people together. And that figures out that common thread, if you will, and for their benefit more than mine.

And I almost made the title of the book, Building Your Network. And we were going to cross out the, "your" and say other people's network. And the book was going to be about building other people's network. And if you can help build other people's networks, that does benefit you in the long run.

[00:29:56] Sanjay Parekh: Yeah. I love that. Last question for you, Joe. If you're talking to somebody who's thinking about doing what you did and taking the leap and launching a small business and going all in on it, what advice would you have for them? 

[00:30:12] Joe Koufman: Well, I'm not a huge fan of the side hustle. And the only reason I'm not a huge fan of the side hustle is, if it's hard enough running a company 50 hours a week and being all in on that company 50 hours a week. What makes you think that 15 hours a week, you could be successful 15 hours a week when there are others spending 50 hours a week trying to solve the same problem. So, I would say you do need to build up enough runway that you're not reliant on your new gig, your entrepreneurial endeavor, to support you and your family and your lifestyle. But when the time is right, it's time to pull the cord and be all in on the new venture. 

And one other thing I'll say is, when you're an employee at a company, you have peers that you can rely on to find support and guidance and advice. When you start your own company, it could be very, very lonely because you no longer have peers that maybe do different functions than you, but at least are at the same level as you, and you can talk through issues. 

And so you've got to find your tribe of people that share a common pursuit. And so for me, there's an international nonprofit called EO, the Entrepreneurs Organization, where it's been, it's served as a de facto group of peers where I can bounce off problems, challenges, those kinds of things, and there's a lot of others.

Vistage is another kind of network like that. But there's a bunch of those kinds of organizations where you can find peer relationships. So, I would say, don't think you have to be doing it all by yourself. And when you feel that loneliness, seek some peer relationships. 

[00:32:19] Sanjay Parekh: Yeah. great advice.

Joe, where can our listeners find and connect with you online? 

[00:32:24] Joe Koufman: So if you go to Setup.us, that's the best place. Setup.us is my company website, and you can go to the contact page and reach me there. But you also, you can follow us on all of the social media. It's @setupsays, is our social handle across all of the channels.

[00:32:43] Sanjay Parekh: Awesome. Thanks so much for being on the show today. 

[00:32:45] Joe Koufman: Hey, I appreciate it, Sanjay. This was a lot of fun.

[00:32:49] Sanjay Parekh: Thanks for listening to this week's episode of the Side Hustle to Small Business podcast, powered by Hiscox. To learn more about how Hiscox can help protect your small business through intelligent insurance solutions, visit Hiscox.com. And to hear more Side Hustle to Small Business stories, or share your own story, please visit Hiscox.com/side-hustle-to-small-business. I'm your host, Sanjay Parekh. You can find out more about me at my website, SanjayParekh.com.